IDFC First Bank Sees Surge in Put Option Activity Amid Sharp Price Decline

Sharp Price Movement and Market Context

On 23 February 2026, IDFC First Bank Ltd. (NSE: IDFCFIRSTB) opened sharply lower, registering a gap down of 10% and closing the day with a 15% loss to ₹70.33. This performance starkly contrasted with the broader sector and benchmark indices, as the private sector banking sector gained 0.76% and the Sensex rose 0.64% on the same day. The stock’s intraday volatility was notably high at 5.18%, with the weighted average traded price clustering near the day’s low of ₹70.98, signalling sustained selling pressure throughout the session.

Technical indicators further highlight the bearish momentum, with IDFC First Bank trading below all major moving averages – 5-day, 20-day, 50-day, 100-day, and 200-day – indicating a downtrend across multiple timeframes. Investor participation has also diminished, as delivery volumes on 20 February fell by nearly 59% compared to the five-day average, suggesting reduced conviction among buyers amid the sell-off.

Put Option Activity Highlights Bearish Positioning

The options market reveals a pronounced tilt towards downside protection and bearish bets. The most active put options for IDFC First Bank are concentrated at the ₹75 and ₹70 strike prices, both expiring on 24 February 2026. At the ₹75 strike, 3,496 contracts were traded, generating a turnover of ₹2,273.02 lakhs, with an open interest of 920 contracts. Meanwhile, the ₹70 strike saw even heavier activity, with 4,781 contracts traded, turnover of ₹1,552.03 lakhs, and open interest rising to 1,310 contracts.

This concentration of put option volume and open interest near and slightly above the current underlying price of ₹70.33 suggests that market participants are positioning for further downside or seeking to hedge existing long exposures. The elevated open interest at these strikes also indicates that these levels are key reference points for traders, potentially acting as support or resistance in the near term.

Mojo Score and Analyst Ratings Reflect Caution

IDFC First Bank’s current Mojo Score stands at 58.0, categorised as a ‘Hold’ rating, a downgrade from its previous ‘Buy’ grade as of 23 October 2025. The downgrade reflects a reassessment of the bank’s near-term prospects amid rising headwinds in the private banking sector and the stock’s recent underperformance. The market capitalisation remains robust at ₹61,037.07 crores, placing the bank firmly in the mid-cap segment, but the Market Cap Grade of 2 indicates moderate liquidity and trading interest relative to larger peers.

Expiry Patterns and Implications for Investors

The 24 February 2026 expiry is attracting significant attention, with put options dominating the volume and turnover metrics. This expiry date is critical as it marks the end of the current monthly options cycle, often accompanied by increased volatility and position adjustments. The heavy put option activity at the ₹70 and ₹75 strikes suggests that traders are either speculating on further declines or actively hedging against downside risk in their portfolios.

Given the stock’s current price below the ₹75 strike and close to the ₹70 strike, these levels will be closely watched in the coming days. A breach below ₹70 could trigger additional put buying or unwinding of long positions, potentially exacerbating downward pressure. Conversely, a rebound above ₹75 might alleviate some bearish sentiment, though the overall technical and fundamental backdrop remains cautious.

Sectoral and Market Comparison

While IDFC First Bank has underperformed its sector and the broader market, the private sector banking industry continues to show resilience with modest gains. This divergence highlights stock-specific challenges, including investor concerns over asset quality, margin pressures, or competitive dynamics. The bank’s falling investor participation and declining delivery volumes further underscore the cautious stance among market participants.

Liquidity metrics indicate that the stock remains sufficiently liquid for sizeable trades, with a 2% threshold of the five-day average traded value supporting trade sizes up to ₹3.53 crores. This liquidity is essential for institutional investors considering tactical adjustments or hedging strategies using options.

Investor Takeaways and Outlook

Investors should approach IDFC First Bank with caution given the recent sharp price decline and the pronounced bearish positioning evident in the options market. The heavy put option volumes at strikes near the current price point to a market expectation of continued volatility or downside risk in the near term. Those holding long positions may consider protective hedging strategies, while traders might explore put options to capitalise on potential further weakness.

However, the bank’s fundamental profile, including its sizeable market capitalisation and established presence in the private banking sector, suggests that any correction could present selective buying opportunities for long-term investors, especially if the stock stabilises above key technical levels. Monitoring upcoming quarterly results, asset quality trends, and sectoral developments will be crucial to reassessing the stock’s trajectory.

In summary, the confluence of technical weakness, bearish options activity, and a recent downgrade to a ‘Hold’ rating signals a cautious near-term outlook for IDFC First Bank Ltd. Market participants should remain vigilant and consider risk management measures amid this evolving scenario.

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